Works on the £13.5m project will now start in April and include the demolition of the existing entrance to make way for a larger cafe and reception area on the ground floor, as well as a new fitness suite on the first floor.
There will also be a new diving structure installed at the swimming pool where Olympic stars Jack Laugher and Oliver Dingley first took up the sport.
The plans were approved at a Harrogate Borough Council meeting on Thursday when councillor Pat Marsh, leader of the opposition Liberal Democrat group, said: "It is nice to see investment in one of our facilities.
"The Hydro was first built how it was so the roof was the spectacular draw and I'm glad this has not been impacted.
"If we are adding more onto this building without any harm to anything else then this can only be for the betterment of our residents."
The Hydro first opened in 1999 as a replacement for the old Coppice Valley pool, and the upgrades will also include improvements to spin and dance class facilities, as well as new bicycle storage and six electric vehicle charging points.
The changing rooms and pool hall will also be refurbished.
Under separate plans, it is anticipated the carbon footprint of the building will be reduced by up to 60% with works including gas boilers being replaced with heat pumps, along with the installation of solar panels and energy monitoring and control systems.
This comes after a successful £1.8m bid for carbon reduction cash from the government.
The Hydro, along with the council's other leisure venues in Harrogate, Knaresborough, Ripon and Pateley Bridge, are now being run by Brimhams Active, a new council-owned company which launched in August 2021.
There are other major plans at some of these sites, including a new swimming pool being built at Ripon Leisure Centre, as well as proposals for a new leisure centre to replace Knaresborough Swimming Pool.
Brimhams Active's managing director Mark Tweedie said in a statement: "Through the provision of fantastic modern leisure and wellness facilities and engaging, inclusive services we will be able to help many more people become active and lead healthier lifestyles."
Councillor Stanley Lumley, cabinet member for culture, tourism and sport at Harrogate Borough Council, and chair of the board of directors at Brimhams Active, added: "I'm delighted that the planning committee has approved the plans to redevelop the Hydro in Harrogate.
"This multi-million pound refurbishment project will create exciting new opportunities for local people to move more, live well and feel great.
"Our vision is to create a healthier and more active population that are living longer, more independent and happier lives.
"And by creating first-class facilities like this we'll be able to deliver the aims and objectives of Brimhams Active."
By Jacob Webster, Local Democracy Reporter